Clause 61 - Expenditure on green technologies: leasing
Finance Bill
11:45 am
Mr John Healey (Economic Secretary, HM Treasury; Wentworth, Labour)
This amendment would include expenditure on assets for leasing in all the first-year allowances schemes. Therefore, it significantly widens the rules introduced in clause 61, which target the special schemes that encourage investments in ''green'' technologies, to help the environment.
It might be helpful if I explain why we have introduced clause 61. Some Committee members will recall the discussions of the Finance Bill that took place last year. Since then, we have continued to listen to representations, and considered carefully the case for extending the scheme to include assets for leasing. We are now satisfied that extending those special allowances to ''green'' equipment for leasing will ensure the widest assistance to the uptake of those technologies, for increasing environmental gain. That is the key aim of the ''green'' technology allowances.
The change will encourage all businesses to look towards ''green'' alternatives when they make their equipment investment decisions. That choice may be made by the user of the equipment, but it might also be made by the person who will lease, let or hire the equipment.
The amendment misses the point and focus of the clause. If adopted, it would include expenditure on assets for leasing in all the first-year allowance schemes, some of which have different purposes—for example, schemes that encourage investment by specific kinds of businesses, such as SMEs.
I wish to explain why we remain unconvinced that there is a clear case for extending these schemes to include assets for leasing. If a lessor were to receive first-year allowances, he or she might pass much of the benefit to the lessee by reducing the rentals that the lessee must pay to use the asset, but the effect on each payment is likely to be small, as the value of the benefit would be spread over the term of the lease. It has not been convincingly shown that a reduction in rents would have any real impact on investment decisions by the businesses targeted by the schemes. Therefore, the costs would almost entirely be dead weight.
However, the Inland Revenue is continuing to have constructive discussions with representatives of the leasing industry, who have indicated that they generally welcome the Bill's proposals impacting on asset finance. I understand why lessors also want first-year allowances more generally, but at present the case for that has not been proved. I advise the Committee to reject the amendment—but I hope that, having heard my explanation, the hon. Gentleman might agree to withdraw it.